Economic Policy

Exploration of the intersection of policy and economic trends, public finance, and economic development

Quote:

IGPA Experts use cutting edge social science research methods to analyze public policy. Our independent evidence and analysis is non-partisan, data-driven, and based in the best academic scholarship available.

Quote Photo:

All bad things come in threes

Authors

Martin J. Luby

On top of a shortfall of sustainable revenue to support state spending and a huge backlog of unfunded pension liabilities, Illinois faces a third type of deficit: a lack of funding for future construction of infrastructure projects. This report uses debt affordability analysis to estimate that even if Illinois maintains its currently high debt burden, the state would need tens of billions of dollars in additional revenue to pay for needed infrastructure.

Improving budgetary practices in Illinois

Authors

Andrew Crosby

Illinois does not follow basic principles of sound budgeting recommended by fiscal experts. This research suggests ways that Illinois and other states can reform practices to avoid fiscal crises in the future.

Two reports released by a team of researchers from IGPA and the Volcker Alliance demonstrate ways states can improve transparency and accountability.

Alternatives to Cook County's 7 percent cap on assessment increases

Authors

Daniel P. McMillen

Following large run-ups in residential property values, a recent Illinois law allowed Cook County to cap increases in homeowners’ property tax assessments. The cap expires soon and is up for renewal. One consequence of an assessment cap is a shift in tax burdens from some taxpayers to others. We examine the cap and a number of alternative policies that might achieve the benefits sought by its proponents with fewer negative side effects.

The effect of demographic change on state and local government budgets

Authors

The impact of an aging society on fiscal institutions has garnered consider-able attention of late, mostly in connection to the federal Social Security program. In the budget year of 2005, federal government spending on Social Security, which provides old-age, survivors and disability insurance, accounted for 4.2 percent of total GDP. If nothing is done to cut the cost of the program, by 2050 it will consume 6.4 percent of GDP.

Does environmental protection hurt low-income families?

Authors

Daniel H. Karney

Policies for environmental protection impact the lives of all U.S. citizens by regulating pollution, imposing costs, and influencing economic decisions. Common examples range from municipal trash disposal to federally mandated Corporate Average Fuel Economy (CAFE) standards for automobile fuel efficiency. Other notable environmental policies include the Environmental Protection Agency’s Acid Rain Program to reduce sulfur dioxide (SO2) emissions from domestic power plants and the much discussed but not yet enacted idea of a program to reduce greenhouse gas (GHG) emissions.

Minimum wages and employment In Illinois

Authors

Whether minimum-wage policies are more or less effective than other policies to support families’ incomes has been the subject of debate for several decades. Advantages of the minimum wage are its philosophical appeal and its relative simplicity of implementation. In addition, there is no explicit and readily available accounting of the cost of the minimum wage. For instance, politicians do not have to raise revenue to fund it.

Questions for policymakers and citizens about proposals for greening the economy

Authors

Andrew P. Morriss

In an effort to solve two problems at once, governments at all levels have been looking to “green investment” proposals, intended simultaneously to produce economic growth and reduce environmental problems.

Why is property tax so unpopular?

Authors

Nathan Anderson

Daniel McMillen

For local governments the property tax has long been a reliable source of significant levels of revenue. Yet, perhaps more than any other tax, the property tax has also long been the source of widespread discontent. In a recent paper, Anderson and Pape (2010) argue that uncertainty and confusion are the main sources of this antagonism toward the property tax. Uncertainty arises in part because property taxes generally rise as property values increase, making it possible for a household’s taxes to rise significantly even as its income holds steady or even falls.

Green taxes

Authors

Daniel H. Karney

In general, green taxes are taxes either directly on pollution emissions or on goods whose use causes pollution. In the revenue-raising context, the basic argument for green taxes can be summarized by the adage: “tax waste, not work.” Taxes on labor income discourage workers from engaging in productive activities, and thus hurt society. Taxing waste, by contrast, discourages harmful pollution, and thus benefits society. In addition, the revenue raised from these green taxes can help mitigate the state’s fiscal crisis.

Don't bank on it

Authors

Cedric Herring

Loren Henderson

In today's difficult economic climate, small businesses are experiencing many challenges in securing credit to fund their operations. Most lenders are conservative in granting business loans. Yet minority and women business owners may face additional hurdles. Herring and Henderson's research, discussed in Policy Forum, found that despite protections against unlawful discrimination under the Equal Credit Opportunity Act, women and minority applicants are more likely than other applicants to be denied loans or receive less favorable terms due to their race and/or gender.